DELAFIELD, Wis. (Stockpickr) -- Professional traders running mutual funds and hedge funds don't just look at a stock's price moves; they also track big changes in volume activity. Often when above-average volume moves into an equity, it precedes a large spike in volatility.
Unusual volume can also be a major signal that hedge funds and momentum traders are piling into a stock ahead of a catalyst. These types of traders like to get in well before a large spike, so it's always a smart move to monitor unusual volume. That said, remember to combine trend and price action with unusual volume. Put them all together to help you decipher the next big trend for any stock.
With that in mind, let's take a look at several stocks rising on unusual volume recently.
Tower International (TOWR) manufactures and sells engineered structural metal components and assemblies for the automotive original equipment manufacturers in the Americas and Internationally. This stock closed up 3.6% to $27.81 in Wednesday's trading session.
Wednesday's Volume: 351,000
Three-Month Average Volume: 191,174
Volume % Change: 98%
From a technical perspective, TOWR spiked sharply higher here right off its 50-day moving average of $26.76 with above-average volume. This move is quickly pushing shares of TOWR within range of triggering a near-term breakout trade. That trade will hit if TOWR manages to take out Wednesday's high of $27.83 to some more near-term resistance at $28.06 with high volume.
Traders should now look for long-biased trades in TOWR as long as it's trending above its 50-day at $26.76 or above more near-term support at $26.16 and then once it sustains a move or close above those breakout levels with volume that hits near or above 191,174 shares. If that breakout triggers soon, then TOWR will set up to re-test or possibly take out its next major overhead resistance levels at $29.07 to its 52-week high at $30.28. Any high-volume move above those levels will then give TOWR a chance to tag $35.